Google's Ad Rates Push Profit Toward $17.07 a Share  

Posted by Mohammad Talha in

By Crayton Harrison and Whitney Kisling

Google Inc.'s ability to raise the price of Internet financial-services advertising by an average 19 percent may help the most widely used search engine overcome a U.S. economic slump and lift profit to $17.07 a share this year.

Customers most constrained by the slowdown, including mortgage companies, are paying the biggest increases, according to Efficient Frontier Inc., an Internet ad agency that tracks industrywide statistics. Rates for home-loan companies in June were 35 percent higher than at the end of last year. Retail, the biggest category of Web advertising, saw prices rise 9.3 percent.

Google is able to charge the higher rates because it can guarantee that shoppers most likely to make a purchase will see the ad, thanks to its software, said Citigroup Inc. analyst Mark Mahaney in San Francisco. The pricing power may help Chief Executive Officer Eric Schmidt, 53, push the shares up by 25 percent, according to a Bloomberg survey of 23 analysts.

``I don't think this is a bulletproof business model, but it has got better armor than other advertising and marketing vehicles,'' Mahaney said. He is ranked third among Internet analysts by Institutional Investor magazine and named Google his favorite stock for long-term investors last month. The shares have fallen as much as 40 percent this year.

Second-Quarter Results

Higher ad prices may be behind a jump in Google's second- quarter profit. The Mountain View, California-based company will today report a gain of 38 percent to $1.28 billion, or $3.99 a share, according to the Bloomberg analyst survey. Net sales are likely to climb 42 percent to $3.87 billion. The company may earn $17.07 a share this year, up 28 percent from 2007.

This is, nevertheless, the first substantial economic slowdown that Google has faced in its four years as a public company. Clicks on ads rose 20 percent in the first quarter, following 52 percent growth a year earlier, Google said in April. The decline in growth is at least partly attributable to the nation's business malaise, Mahaney said.

``No company can be completely immune when the economic pressures are wide-ranging and far-reaching,'' said Mark May, an analyst at Needham & Co. in New York. He still recommends buying Google shares, which he doesn't own. (full Story Link)


Reports: Apple is No 3 PC maker in US - No 6 worldwide  

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Dueling reports Wednesday from the two leading PC survey firms — Gartner and IDC — confirm what the crowds at the Apple (AAPL) stores have been telling us: The Mac had a great second quarter.

According to Gartner, Mac sales grew 38% year-over-year to edge out Acer/Gateway/ PackardBell for the No. 3 spot in the United States after Dell (DELL) and HP (HPQ). IDC recorded slightly slower growth (31.7%) and has Apple still trailing Acer by 2,000 units — not a statistically significant figure in a quarter in which Apple shipped an estimated 2.37 million Macs worldwide.

Gartner puts Apple’s U.S. market share at 8.5%, up from 6.4% a year ago; IDC has it at 7.8%, up from 6.2%. Both reports are preliminary.

Apple still doesn’t make the top 5 in either company’s list of top PC vendors worldwide, although IDC’s Loren Loverde says it came in No. 6.

It’s worth noting that while its competitors were cutting prices to boost sales in a tight domestic economy, Apple managed to grow faster while maintaining profit margins that are the envy of the industry.

And if you count iPhones and iPod touches as computers, says 9to5 Mac’s Seth Weintraub, “you get a whole new ball game.”

Below the fold: the charts from both reports. Gartner charts courtesy of AppleInsider. (full story Link)


Google is starting to look a lot like Microsoft  

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by Tom Sullivan (story Link)

Too bad Google picked up Team Redmond's bad behaviors -- the ones that negatively impact IT and the public at large. Take the recent agreement with Yahoo, for instance.

"The deal to let Google sell its ads on Yahoo's Web site, and share an estimated $800 million a year in revenue, is bad for business, bad for consumers, and bad for IT," Bill Snyder writes in Warning: Google is becoming Microsoft's evil twin. "It will raise Web advertising rates by more than 20 percent. It ought to be stopped."

Simply put, it will give Google/Yahoo a near monopoly on Internet advertising, Snyder asserts.

Apple shows off first China store  

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Apple allowed a sneak peek at its flagship store in Beijing on Thursday, along with a glimpse of its China strategy.

The two-level store store will open July 19 in Beijing's Sanlitun entertainment district at 10 a.m., Apple's first in China and its 219th worldwide.

"This is the first of many stores we will open in China," said Ron Johnson, Apple's senior vice president of retail, in remarks at the store. He later added that Apple will open stores "in Beijing, in Shanghai and beyond," and confirmed that another store will open in Beijing's Qianmen area, a shopping street south of Tiananmen Square that has been renovated ahead of the Olympic Games, which begin next month. Qianmen was thought to be the location for Beijing's Apple Store when it was first reported.

Apple has opened its first store in China, in Beijing.

The store will offer Genius Bar services in Chinese and English, said John Ford, the store's manager, with support in some other languages available, including German.

Absent from the store's opening will be sales of the iPhone, either in its early 2G (second-generation telephony) version or the new 3G (third-generation telephony) model. Although negotiations between Apple and China Mobile -- the world's and China's largest mobile service provider -- have taken place over the last 12 months, no deal has been announced. (full story Link)

Microsoft expands universe with Xbox  

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New 360 model is interactive, plays television shows, music, films. Marke Andrews (Vancouver Sun)

Microsoft is still making Xbox games for its target audience of 19-to-26-year-old males who like action games with strong graphics, but the company has broadened its entertainment role with other interactive media.

The Xbox 360 doesn't just play standard games. It has interactive games in which players can create avatars to participate in the games, it plays television shows, music and films.

Think of the Microsoft console, says Vancouver video game icon Don Mattrick, as an entertainment centre.

"Our starting point is making great games for interactive entertainment, and we pay a lot of attention to that," said Mattrick, Microsoft's senior vice-president, interactive entertainment business, speaking on the phone Wednesday from Los Angeles, where he was between meetings. But, thinking beyond the core business, Mattrick believes that Xbox "has the capabilities to be the centre of your living room."

Mattrick and other Microsoft executives spoke of its expanding universe at this week's Electronic Entertainment Expo (E3) in Los Angeles. Faced with robust competition from Nintendo's Wii -- whose physical games put the active in interactive gaming -- Microsoft has made strides in taking its customers further with its products.

In a move called Xbox Experience, Microsoft updated its software and the user interface, making it easier for online gamers to navigate its systems.

It allows them to create avatars, digital alter-egos that can participate in Microsoft Arcade games. The avatar can also participate in 1 vs 100, a massively multiplayer game show with a live host and hundreds of digital participants who will play on Xbox Live Primetime, a Microsoft channel.

"You can be the one or you can be a member of the 100 or you can be in the audience," said Mattrick, the former president of Electronic Arts international studios. (full story Link)

Apple offers MobileMe-a culpa, extra month of sync service  

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Apple Inc. extended an olive branch to subscribers of its MobileMe online sync service today by apologizing for problems during last week's opening and adding 30 additional days of service to all accounts.

In an e-mail sent to MobileMe subscribers today, Apple acknowledged the service's shaky start as it shifted from the older .Mac sync and storage service. "We have recently completed the transition from .Mac to MobileMe," the e-mail read. "Unfortunately, it was a lot rockier than we had hoped. Although core services such as Mail, iDisk, Sync, Back to My Mac, and Gallery went relatively smoothly, the new MobileMe web applications had lots of problems initially."

MobileMe, which costs $99 for a single-user annual subscription, added additional storage and new Web-based e-mail, contact and scheduling applications to the synchronization features found in .Mac.

But it was also touted by Apple as "Exchange for the rest of us" from the moment it was unveiled in June, and it was marketed with the phrase "push" to describe nearly instant synchronization of data between Macs, PCs, iPhones, iPod Touches and the MobileMe "cloud" servers.

That description, and the fact that Macs and PCs did not sync instantly, but instead merged data with the MobileMe servers only every 15 minutes at best, set off a flood of complaints. Many users said Apple had deceived them, while others simply expressed disappointment on the company's support forums and elsewhere online.

Today, Apple backed away from the "push" label, at least for now. "Another snag we have run into is our use of the word 'push' in describing everything under the MobileMe umbrella," read the mea culpa message to subscribers. "Even though things are indeed instantly pushed to and from your iPhone and the web apps today, we are going to stop using the word 'push' until it is near-instant on PCs and Macs, too." (full story Link)

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